Origin Energy Ltd (ASX: ORG) released its quarterly results to the market on Friday, with a fairly neutral immediate reaction by the market to its announcement. At the end of trade on Friday, the Origin share price was down slightly by 0.36% to close at $8.20.
This morning is a different story, with Origin shares falling 3.29% on Friday's close to be trading for $7.93 at the time of writing.
What did Origin report?
As expected, Origin's electricity and gas volumes were down for the period, although its existing earnings before interest, tax, depreciation and amortisation (EBITDA) guidance for the full year was unchanged.
Origin is one of the major providers in Australia's national electricity market alongside AGL Energy Limited (ASX: AGL) and EnergyAustralia.
Prior to this morning's drop, the Origin share price had performed strongly since mid-August 2019, rising from $7.02 to $8.20, an increase of 16.8%.
The ASX energy sector is seen as a defensive share class, due primarily to the non-cyclic nature of its earnings. Some investors have been attractive to more defensive shares in 2019 due to high tensions around the US–China trade war.
Integrated gas production up slightly
In Origin's integrated gas segment, production by Australia Pacific LNG (APLNG) rose by 2% from the September quarter, benefitting from a ramp-up of the Eurombah Reedy Creek InterConnect (ERIC) pipeline, less maintenance and improved non-operated production performance. The ERIC pipeline was commissioned in July last year.
APLNG revenue rose by 4% on the September quarter to $717 million, driven by a higher proportion of LNG sales, although it was down 3% driven by lower effective prices.
Drilling of the Kyalla 117 vertical section was completed in December 2019 as Beetaloo exploration continues.
Electricity and gas volumes lower
Origin's energy markets electricity volumes were down 5% on the September 19 quarter, reflecting seasonality, and were also down by 5% on the prior corresponding quarter due to expiry of business contracts, and lower retail usage and customer numbers.
Gas volumes were down by 26% on the September 19 quarter, mainly due to seasonality, and were down by 12% on the December 18 quarter due to the roll-off of some short-term wholesale contracts. However, these results were partially offset by increased retail volumes and increased sales to generation.
Origin recorded capex of $162 million primarily related to generation maintenance and its Beetaloo appraisal. It received net cash distributions from APLNG of $520 million during the first half of FY20, which was in line with guidance.
Origin also confirmed that the unit at Mortlake Power Station in Victoria returned to service in late December 2019.
